San Onofre Nuclear Power Generating Station (photo: Orange County Register)

Someone is going to have to pay an estimated $4 billion to cover losses from the shuttered San Onofre nuclear power plant, and its principal owner and operator, Southern California Edison, doesn’t think it should be them.

The Orange County Register reported last week that Edison formally asked California’s Public Utilities Commission (PUC) to ding ratepayers $2.4 billion over the next seven years to pay for the power they won’t be getting from the plant that Edison ran into the ground. Minority owner San Diego Gas & Electric asked for $808 million in a separate filing.

The main alternative is that investors who made money off the utility in good times will take a loss in bad times. But as was readily apparent when banks were bailed out during the economic meltdown they precipitated five years ago, that isn’t always how capitalism works.

Edison took out full-page ads (pdf) in newspapers, paid for by you-know-who, to make their case. They cite the “longstanding . . . regulatory compact” that, because regulators won’t let the utility raise its rates whenever it pleases, it isn’t responsible for losses. Investors wouldn’t invest if they thought they might lose money. “The American utility system works because everybody is in it together,” the ad said. “Everyone shares the benefits and the costs.” Well, maybe not all the costs.

Customers are currently paying around $600 million a year to Edison for San Onofre power that isn’t being produced. Edison Chief Executive Officer Ted Craver said that Edison has a $2.1 billion investment in the plant and is still $300 million shy of funding its $3 billion decommissioning expenses. Customers have been paying around $8 million a year into a fund for that purpose.

Edison still has a shot at picking up money from insurance companies and Mitsubishi Heavy Industries, the company that designed and delivered the faulty steam generators in 2009 and 2010 that leaked radiation in January 2012. Subsequent testing found hundreds of eroded steam tubes, damaged by vibration. Edison blamed Mitsubishi, which blamed computer problems and bad math for the misdesigned equipment. There is evidence that both knew the design was problematic.

Edison avoided a full government license review of the steam generator upgrade by claiming it was a relatively minor tweak. When the U.S. Nuclear Regulatory Commission told Edison back in October that it would have to submit to that review if it wanted to restart the plant at 70% power to test repairs, Edison gave up the effort.

The PUC’s own Division of Ratepayer Advocates (DRA) argued a year ago that customers shouldn’t be paying for power they weren’t using. Joseph P. Como, acting director of the DRA, wrote the commission that commissioners should stop paying Edison now “instead of waiting several more months and allowing hundreds of millions of dollars in needless costs to be borne by customers.”

The independent arm of the PUC has no institutional power and did not win that argument.